Ups and downs

Published: 21 November, 2011 08:18 IST | Arun Kejriwal |

With petrol prices coming down last week, the volatility is expected to continue. Markets will keenly follow the developments in the winter session of the Parliament beginning tomorrow

With petrol prices coming down last week, the volatility is expected to continue. Markets will keenly follow the developments in the winter session of the Parliament beginning tomorrow

The markets last week lost on every single day of trading. The BSESENSEX lost a staggering 821.31 points or 4.78 per cent to close at 16,371.51 points. The NSENIFTY lost a little more at 263.05 points or 5.09 per cent to close at 4,905.80 points. The broader indices were even weaker with the BSE100, BSE200 and BSE500 losing 5.34 per cent, 5.54 per cent and 5.65 per cent. The BSEMIDCAP and BSESMALLCAP were even bigger losers with losses of 7.24 per cent and 8.61 per cent. BSEREALTY lost 11.19 per cent while BSEMETAL lost 7.43 per cent. As far as individual stocks were concerned, the big losers were Maruti Suzuki which lost 11.14 per cent, Sesa Goa down 10.87 per cent, Reliance Industries down 8.60 per cent and Coal India down 8.58 per cent. In other stocks Pipavav Defence was down a whopping 34.44 per cent for the week and was locked at the down circuit on Friday. SKS Microfinance lost 22.53 per cent and has been at the lower circuit on all five days of the week. The stock closed at Rs 122.40 and in October 2010, the highflying stock was at a lifetime high of Rs 1490. In 13 months the share is reduced to just about eight percent of its historical high.

It may be mentioned that stocks like Maruti, SBI, ICICI Bank and many of the PSU stocks like National Aluminium, the oil companies like HPCL, BPCL and IOC are all at their 52 week lows. The BSEPSU index, which closed at 6,833.90 points, is down 27.76 per cent from the opening level of 9,460.63 as of 31st December 2010. The benchmark indices like the BSESENSEX and NIFTY have lost much less at 20.17 per cent and 20.03 per cent respectively. The problem in the market is now no longer confined to just the Euro Zone crisis, but is extending beyond that and India centric issues are also coming to the forefront. Issues like fiscal deficit, rising interest rates, etcetera are devolving.  The disinvestment target of Rs 40,000 crore is keeping the government on tenterhooks and they are planning to to change the rules of buyback. The slowdown in corporate profits on rising costs and a slower growth as compared to lower rates will all add up to the pressure of falling revenues of the fiscal. The weakening of the Indian Rupee, which closed at a level of Rs 51.33 and would affect the deficit of the oil pool account, which is at a substantial variation to the budgeted figure, would add to the pressure. One therefore has a double effect with revenues falling and expenditure rising which could put severe pressure on the fiscal deficit and targeted deficit of the government.

The week saw Foreign Institutional Investors (FIIs) continuing their sales with Rs 1,643 crore while domestic institutions bought worth Rs 1,226 crore. The fall this week was the third consecutive weekly fall and we are now well below the level of pre-Diwali when we had a super week before and after the muhurat day. In that week the BSESENSEX had gained a staggering 1,019 points to close at 17.804 points. This fall has been steep and values have eroded across the board.

The week ahead would see the expiry of November futures on Thursday, November 24. The value at the end of October expiry was 17,250 on the SENSEX and 5,200 on the NIFTY, which is roughly 6 per cent below those levels. There would be an attempt to move closer to these levels and Monday could see the markets gaining when the reopen.  It may be mentioned that from the intraday lows of Friday the SENSEX has recovered 207 points while the NIFTY has recovered 68 points. The volatility would continue and the markets would have one eye on the developing scenario in Europe and US, while on the other hand we would be looking at developments in Parliament, which begins its winter session from Tuesday, November 22. One would expect that steps be taken to introduce bills, which would help the economic slowdown within the country.

The BSESENSEX has support in the coming week at 16,225 points, then at 16,084 points, then at 15,993 points, then at 15,892 points and finally at 15,751 points. This incidentally is the low of the year so far. The resistance is at 16,457 points, then at 16,688 points, then at 16,991 points, then at 17,120 points and finally at 17,391 points. The NSENIFTY has support at 4,857 points, then at 4,779 points, then at 4,752 points, then at 4,719 points and finally at 4,654 points. The low of the year was 4,720 points.

The market would be volatile and any rally, which happens during the beginning of the week, should be used to exit long positions or make fresh shorts. The low of the year is certainly under threat.

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